Amentum (AMTM) will struggle to get credit for business development and growth outlook while its legacy business weighs on growth, RBC Capital Markets said in a Tuesday note.

The report said its fiscal Q3 results were largely in line with expectations. The note also said fiscal 2026 revenue guidance was lowered slightly while its initial fiscal 2027 outlook showed a step-down in organic growth.

The note said its de-leveraging, margin expansion, and exposure to growth markets are a positive.

"However, we continue to view revenue growth as a key metric for investors, and believe the initial FY27 outlook will not support a material multiple re-rating," the note said.

The note also said a key risk is the funding levels of the broader US federal government, with about 80% of revenue derived from the US government.

RBC retained a sector perform rating while lowering its price target to $26 from $28.

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